SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

Sabana Industrial REIT / Equity Bottom-Up

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SPH REIT kicked off the current financial reporting season for S-REITs on 7 Jan 2022 with the release of its first quarter (ended 30 Nov 2021) business update. This was followed by Sabana Industrial Trust, which reported its second half and full year (ended 31 Dec 2021) financial results on 20 Jan 2022. 
Another 25 S-Reits have also confirmed that they will unveil results or business updates between Jan 24 and Feb 23 for their respective period ended Dec 31, 2021. Among them, 16 S-Reits would be reporting full-year financial results, 4 would be reporting first-half or third-quarter financial results, and another 5 would be providing quarterly business updates.

SPH Reit, in its Q1 FY2022 business update, reiterated its strategy to remain focused on maintaining high occupancy and generating sustainable cash flow while working in partnership with tenants. The Reit's portfolio occupancy rates maintained at 98.8 per cent for the quarter while portfolio weighted average lease expiry (WALE) improved to 5.5 years by net lettable area (NLA) and 2.9 years by gross rental income (GRI) from FY2021's WALE of 5.4 years by NLA and 2.7 years by GRI. 
The Reit remains cautiously optimistic despite the developments surrounding the Omicron variant. It noted resilient tenants' sales in Q1 FY2022 for its Singapore portfolio despite restrictions on dining-in. Occupancy rates for its Singapore portfolio also improved to 99.8 per cent from 98.9 per cent in Q4 FY2021, in line with its strategy of maintaining high occupancy and stabilised cashflow.

Sabana Industrial Reit (Sabana) reported a 14.4 per cent year-on-year increase in gross revenue for H2 FY2021, mainly due to higher occupancy rates from several properties across the portfolio. Net property income (NPI) also rose 10.4 per cent year on year on the higher revenue.

For the full year, the Reit's revenue and NPI increased 14.2 per cent and 16.4 per cent year on year respectively, compared to FY2020. This translated to a full year distribution per unit (DPU) of 3.05 cents, a 10.5 per cent year-on-year increase. 
The Reit manager noted that its focus on attracting tenants in expansionary sectors has led to the continued onboarding of companies from the electronics, healthcare, data centre, and logistics sectors in FY2021. Sabana's overall occupancy rate as at Dec 31, 2021 was 85.4 per cent, up from 76.5 per cent as at Dec 31, 2020 and the highest since 2018. During the year, Sabana announced the removal of its syariah compliance requirement to provide the Reit with access to more diversified funding sources and to enable it to appeal to a wider pool of tenants for its next phase of growth.  REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/full-steam-ahead-for-s-reits-earnings-season">read </a>the original version.
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    Schedule of expected S-Reits earnings or business updates


SPH REIT kicked off the current financial reporting season for S-REITs on 7 Jan 2022 with the release of its first quarter (ended 30 Nov 2021) business update. This was followed by Sabana Industrial Trust, which reported its second half and full year (ended 31 Dec 2021) financial results on 20 Jan 2022.  
Another 25 S-Reits have also confirmed that they will unveil results or business updates between Jan 24 and Feb 23 for their respective period ended Dec 31, 2021. Among them, 16 S-Reits would be reporting full-year financial results, 4 would be reporting first-half or third-quarter financial results, and another 5 would be providing quarterly business updates.

SPH Reit, in its Q1 FY2022 business update, reiterated its strategy to remain focused on maintaining high occupancy and generating sustainable cash flow while working in partnership with tenants. The Reit's portfolio occupancy rates maintained at 98.8 per cent for the quarter while portfolio weighted average lease expiry (WALE) improved to 5.5 years by net lettable area (NLA) and 2.9 years by gross rental income (GRI) from FY2021's WALE of 5.4 years by NLA and 2.7 years by GRI.  
The Reit remains cautiously optimistic despite the developments surrounding the Omicron variant. It noted resilient tenants' sales in Q1 FY2022 for its Singapore portfolio despite restrictions on dining-in. Occupancy rates for its Singapore portfolio also improved to 99.8 per cent from 98.9 per cent in Q4 FY2021, in line with its strategy of maintaining high occupancy and stabilised cashflow.

Sabana Industrial Reit (Sabana) reported a 14.4 per cent year-on-year increase in gross revenue for H2 FY2021, mainly due to higher occupancy rates from several properties across the portfolio. Net property income (NPI) also rose 10.4 per cent year on year on the higher revenue.

For the full year, the Reit's revenue and NPI increased 14.2 per cent and 16.4 per cent year on year respectively, compared to FY2020. This translated to a full year distribution per unit (DPU) of 3.05 cents, a 10.5 per cent year-on-year increase.  
The Reit manager noted that its focus on attracting tenants in expansionary sectors has led to the continued onboarding of companies from the electronics, healthcare, data centre, and logistics sectors in FY2021. Sabana's overall occupancy rate as at Dec 31, 2021 was 85.4 per cent, up from 76.5 per cent as at Dec 31, 2020 and the highest since 2018. During the year, Sabana announced the removal of its syariah compliance requirement to provide the Reit with access to more diversified funding sources and to enable it to appeal to a wider pool of tenants for its next phase of growth.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Full steam ahead for S-Reits' earnings season

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<ul><li><a href="https://www.smartkarma.com/entities/sabana-industrial-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:911" rel="noopener">Sabana Industrial REIT (SSREIT SP)</a> 2H21 DPU fell 31.4% YoY; Delivering on turnaround story  </li><li>Oakwood plans to open 20 new properties in 2022; Targets to double portfolio by 2025</li><li><a href="https://www.smartkarma.com/entities/hong-lai-huat-group-ltd" target="_blank" data-smartkarma-citation="entities:9115" rel="noopener">HLH Group (HLHG SP)</a> optimistic on Cambodian market recovery in 2022</li></ul>

Sabana Industrial REIT (SSREIT SP) 2H21 DPU fell 31.4% YoY; Delivering on turnaround story  Oakwood plans to open 20 new properties in 2022; Targets to double portfolio by 2025HLH Group (HLHG SP) optimistic on Cambodian market recovery in 2022

ASEAN Builder's Scoop (20Jan22) - SSREIT Delivering on Turnaround Story

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Sabana Industrial REIT / Forensic Accounting

<ul>
<li>In December 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT</li>
<li>While Sabana's unitholders were ostensibly holding out for more favourable transaction terms, this was not forthcoming and transaction ultimately fell through</li>
<li>In this Insight, we look into Sabana a year on and discuss whether its unitholders have been left to rue the failed transaction and this was but a pyrrhic victory</li>
</ul>


In December 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT
While Sabana's unitholders were ostensibly holding out for more favourable transaction terms, this was not forthcoming and transaction ultimately fell through
In this Insight, we look into Sabana a year on and discuss whether its unitholders have been left to rue the failed transaction and this was but a pyrrhic victory


One Year After Failed Merger, A Pyrrhic Victory for Sabana's Unitholders?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Digital Core REIT / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/digital-core-reit" target="_blank" data-smartkarma-citation="entities:35145:1" rel="noopener">Digital Core REIT (DCREIT SP)</a> is the exclusive S-REIT sponsored by <a href="https://www.smartkarma.com/entities/digital-realty-trust-inc" target="_blank" data-smartkarma-citation="entities:13149:1" rel="noopener">Digital Realty Trust (DLR US)</a>. It is seeking to raise US$600 million at US$0.88 per unit. </li>
<li>In <a href="https://www.smartkarma.com/insights/digital-core-reit-ipo-reaching-for-the-clouds" target="_blank" data-smartkarma-citation="insights:61737" rel="noopener">Digital Core REIT IPO: Reaching for the Clouds</a>, we outlined its attractive value proposition.    </li>
<li>Cornerstones such as Blackrock, Fidelity, JP Morgan AM account for 61% of the offer. Our valuation analysis suggests that the IPO price of $0.88 per unit is reasonable.</li>
</ul>



Digital Core REIT (DCREIT SP) is the exclusive S-REIT sponsored by Digital Realty Trust (DLR US). It is seeking to raise US$600 million at US$0.88 per unit. 
In Digital Core REIT IPO: Reaching for the Clouds, we outlined its attractive value proposition.    
Cornerstones such as Blackrock, Fidelity, JP Morgan AM account for 61% of the offer. Our valuation analysis suggests that the IPO price of $0.88 per unit is reasonable.


Digital Core REIT IPO: Valuation Insights

Daiwa House Logistics Trust / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. </li>
<li>In <a href="https://www.smartkarma.com/insights/daiwa-house-logistics-trust-ipo-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:60978" rel="noopener">Daiwa House Logistics Trust IPO: The Flow of Things</a>, we outlined its attractive value proposition.  </li>
<li>Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP) has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. 
In Daiwa House Logistics Trust IPO: The Flow of Things, we outlined its attractive value proposition.  
Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.


Daiwa House Logistics Trust IPO: Valuation Insights

Singapore

Sabana Industrial Real Estate Investment Trust is a real estate investment trust. The Trust focuses on investments in income-producing real estate used for industrial purposes in Asia, as well as real estate-related assets, in line with Sabana investment principles.

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Sabana Industrial REIT (SSREIT SP)

REIT Watch - Full steam ahead for S-Reits' earnings season

SPH REIT kicked off the current financial reporting season for S-REITs on 7 Jan 2022 with the release of its first quarter...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (20Jan22) - SSREIT Delivering on Turnaround Story

SSREIT delivering on turnaround story; Oakwood targets double portfolio by 2025; HLHG bullish on Cambodia; MEG buys 2.2ha MJC property for...

SCCM Asia Research

One Year After Failed Merger, A Pyrrhic Victory for Sabana's Unitholders?

In Dec 2020, Sabana's unitholders voted down a proposed merger with ESR-REIT. A year on, we look into Sabana and discuss whether its unitholders...

Jason Yap, CFA

Digital Core REIT IPO: Valuation Insights

Digital Core REIT is seeking to raise US$600 million at US$0.88 per unit. Our valuation analysis suggests that the IPO price of $0.88 per unit is...

Arun George

Daiwa House Logistics Trust IPO: Valuation Insights

Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable. Bookbuilding will end on 18 Nov, with an expected listing date...

Arun George

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